Insurance practitioners who have studied for professional qualifications might be forgiven for thinking that there are such things as underwriting principles.
For example, in motor insurance, the vehicle, where and how it is used, the driver and claims records are all factors as well as facts. A broker might also expect an insurer to be consistent in assessing a risk and calculating a premium.
I would also hope insurers regard the broking world I live in as adding value and being reasonably responsible and professional, and providing advice and guidance.
After 35 years working in insurance I must ask whether underwriting is finally dead.
My firm has lost the personal motor insurance of two long-standing clients. Did we get it so badly wrong? Here are our quotations:
In both instances we rang the insurer to check the best premium available.
We insured both clients with Norwich Union. Each client was persuaded to get a quote from the distributor (manufacturer's scheme). They took it - well, who wouldn't?
Insurer: Norwich Union Porsche scheme.
Insurer: Norwich Union Jaguar scheme.
How can our 11% commission come anywhere near these 41% and 32% differentials? I do not believe our clients suspect us of having taken 30% brokerage over the years.
Should we be told what is going on? Who is subsidising who? Perhaps all sensible brokers handling private motor insurance should admit defeat now, as with friends like these ...?
TPW Dowlen BA, ACII